Alibaba buys the app Ele.me to conquer the Asian food market at home

Jack Ma, president and founder of Alibaba Group Holding Limited I was not satisfied with his last inroads in the pharmaceutical industry, grocery items or selling flowers. Thus, departments mobilized interweave the giant Asian sales, Alibaba Group, for a new acquisition with great long-term impact. In this case, is about the application to order food online Ele.me.

Finally, last 2 of April, Alibaba completed the purchase of the app Ele.me with the firm objective to conquer the Asian food market at home.

Chinese e-commerce giant already it had a significant shareholding in the app and has now acquired the remaining to clinch the platform as a whole. A transaction that grants the company an enterprise value of 9.500 millions of dollars.

It's a statement, the company has confirmed the operation and explained, in the words of the CEO of the group, Daniel Zhang, the purpose of it: “Ele.me has achieved leadership in the sector of local services and food delivery online in China. Our shared belief that The new retail will create more value for customers and traders brought us“.

With its latest moves, Alibaba Group has made clear that its strategy is to be increasingly present in physical stores and offer digital processing tools. Or what is the same, eliminating barriers between digital business and physical.

Order online food is not a typically Western phenomenon. In a region 300 million users of telephone applications and home food delivery market valued at 28 billion euros, Ele.me is the application that enjoys greater popularity.

Founded in 2008 by Mark and Jack Zhang Kang, the application, whose name can be translated as “Hungry now?”, It grew from a small-caliber project born in the student environment of Minhang Campus Universidad Shanghai Jiao Tong, to become a standard of the food reserve app in China. Now the giant shopping has made it to increase their impact and influence in Asia.

This transformation took place thanks to the injection of capital through financing campaigns Series E and Series F with which they raised around one billion euros by counting the joint contributions of investors including CITIC PE, Joybuy, Sequoia Capital, Diangping, Tencent Holdings, Hualin Group, China Media Capital and Assets Gopher among others.

The rapid expansion of the service is due to the availability of funds to promote the application to order food online, the participation of Chinese catering industry and the good experience offered to users; within which include reducing the delivery time and the variety of possibilities offered diners.

already 2015, Alibaba Group had placed their trust in Ele.me, making an investment of just over one billion euros. Baidu input in the game (Chinese Facebook), It seems not to have liked the titan of sales Sinic.

Purchase details and negotiations

In late February he had known that Alibaba has contacted all shareholders Ele.me to discuss details of a purchase what, finally effected, posicionaría as the consortium leader in another market more.

Filtration was conducted by Beijing Hualian Department Store Co., in an attempt to toughen negotiations, they certainly were difficult in advance. Baidu, who sold his platform Alibaba food delivery by Baidu Waimai 640 millions of euros, It has been a hard nut to crack but has finally caved.

On the previous occasion, Baidu sold an app dand reserve meals that produced losses; now we talk about one of the phone applications to request more successful online food Asia. The purpose of Alibaba is evident; become dominant in this market.

According to Chinese media, The acquisition was made by a stile eight billion euros. This amount would exceed the value of the company in Q4 2017 (8.5 millions of euros), as Alibaba Group already owned 23% of actions. This indicates the projection is expected in the coming years Ele.me.

For Alibaba is a small risk because purchase allows them to evaluate the performance of a synergistic fusion of physical stores and online shopping.